Palestinian unity government may widen US-EU rift

A new Palestinian unity government could widen a rift between the United States and the European Union and fracture an economic blockade of the Hamas-led administration.

Washington does not want to lift international sanctions until the government recognises Israel, renounces violence and abides by interim peace deals, the conditions set by the Quartet of Middle East mediators, Western diplomats and analysts said.

But at least some in the European Union are signalling a willingness to settle for less from the administration that Hamas Islamist militants and moderate President Mahmoud Abbas agreed on Monday to begin putting together, diplomats said.

As a first step, the Europeans could reach out to non-Hamas ministers in the unity government, then try to roll back an embargo that has prevented 165,000 Palestinian government workers getting their salaries and fuelled fears of civil war, the diplomats said.

"This unity government serves one main purpose: to break the economic siege," said Mouin Rabbani, senior analyst for the International Crisis Group. "But the jury is still out on whether it is going to achieve that."

Monday's deal left many questions unanswered. A Hamas spokesman said the group had no intention of recognising Israel's right to exist. Hamas also wants Ismail Haniyeh, the current Prime Minister, to stay in the post.

That will not go down well in Washington, which had privately urged Mr Abbas to sack Mr Haniyeh's government, not join it.

US officials had warned Mr Abbas's Fatah faction that it would be shunned too if it joined a government that did not accept the Quartet's three conditions.

Mr Abbas's partial salary payments to government workers, including Hamas ministers, upset the Bush administration.

David Makovsky, a senior analyst at the Washington Institute, said there was a growing sense within the US government that Mr Abbas has been "complicit in assisting Hamas rather than serving as a counterweight".

Zakaria al-Qaq of the al-Quds University said Mr Abbas and Mr Haniyeh, both weakened, aimed to cut a "face-saving" deal to keep the economic crisis from getting any worse. "The presidency is not in any better shape than the Prime Minister. Both of them are fighting for their political survival," he said.

Western diplomats said it would take time for Washington and its Quartet partners - the EU, the United Nations and Russia - to evaluate the unity government's make-up and policies.

The appointment of non-Hamas ministers to key positions that deal with the international community, such as the foreign and finance ministries, could help ease the government's diplomatic isolation, diplomats said.

Western diplomats said some EU states are eager to ease the embargo even if Hamas only meets some of the Quartet's conditions.

They say the Europeans wanted to base their decision on the stated policies of the new government, not the Hamas movement, whose charter calls for Israel's destruction.

"The Europeans are looking for a solution, and if there is a way to do it, they will do it," said one European diplomat who spoke on condition of anonymity. The goal, he added, was to "find a Palestinian government that the EU can deal with again".

Israel might also be willing to draw a distinction between Hamas the government and Hamas the militant group.

"If the government adopts a platform that accepts the three conditions, even if the Hamas movement says different things, that would still be a positive sign," said a senior Israeli official.

Mr Rabbani said the big question was whether the Europeans would come under US pressure to hold the line.

The US-led embargo has already been weakened. European and Arab states have started paying Palestinian workers at least a portion of their long overdue salaries through Mr Abbas's office. Likewise, Hamas has been able to smuggle in cash - as much as $55 million a month according to Israeli estimates.